Are We In A Depression?
By Justin Gardner | Related entries in Economy, Jobs, Money
Following up on my previous post about those awful underemployment numbers, Naked Capitalism agrees that the 15.6% number is definitely a depression type stat.
However, Robert Reich says we’re now in a depression and we’ll need more stimulus…
Capital markets may or may not unfreeze under the combined heat of the Treasury and the Fed, but what happens to Wall Street is becoming less and less relevant to Main Street. Anxious Americans will not borrow even if credit is available to them. And ever fewer Americans are good credit risks anyway.All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today’s bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.
This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.
Will there be enough political will for more stimulus bills? In my mind, it doesn’t make any sense that we’d keep pouring billions upon billions into Iraq, but not invest in our own infrastructure.
Still, I’ll bet the Blue Dogs will NOT support more money after passing this massive budget. So folks like Reich better start think about other ways to fix this than selling debt or printing money.
This entry was posted on Friday, April 3rd, 2009 and is filed under Economy, Jobs, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 3rd, 2009 at 3:01 pm
There aren’t too many other ways besides war or some other disaster. What killed the recovery in the late 30’s was the fact that Roosevelt cut back on spending as we started to listen to the Republicans.
What needs to be realized is that recovery takes a long time as any other transformation does. That’s what it is, a transformation. An example would be the conversion of our economy to electric power, which took decades.
So forget the quick fix. It’s not happening. Remember that fixing the sick economy of the 20’s/30’s took billions spend in the 30’s during the war AND after the war on hosts of government programs, including infrastructure investments in the interstate highway system, dams, bridges, parks, schools, libraries, you name it and in social programs like the GI bill and heavy spending on schools and higher education infrastructure and personnel.
That took a lot of money. But we got a lot for it in return.
One thing we need is less incentive to invest in banks, loans, real estate, etc and more incentive to invest in producing things. One of the biggest mistakes of the 60’s ever, was the movement of capital away from investing in manufacturing infrastructure and production facility improvements – someone correct me here but I recall it was due to a change in tax laws and banking rules. The early casaulty was the steel industry, which failed to invest it’s capital in intself and went into real estate and other investments instead. What we got was an Alaskan pipeline built with Japanese steel because America could no longer compete with its antiquated steel mills. Ditto US car companies in the 70’s and so on.